'Hot air'

"The Government has already put in place a series of very important reforms, for example our reforms to unfair mortgage exit fees start on July 1," he said.

"I've always made it clear there would be further reforms because what you need here is very careful, methodical reform.

"There's no silver bullet here, there's no amount of hot air from Joe Hockey can solve the structural problems that we have in our banking sector, and they have to be addressed over time with reforms that Mr Hockey and his colleagues never, ever contemplated in the 12 years they were in office."

However, it is believed the Government's package will incorporate several of Mr Hockey's ideas.

The Greens Leader Bob Brown says there needs to be a review of how interest rates are set.

"The re-regulation of interest rates is going to now get a major boost in terms of public discussion," he said.

He says the Commonwealth Bank's decision to move beyond Tuesday's official interest rate rise reinforces the need for legislative action.

The Senate has established an inquiry to look at what can be done to boost banking competition.

Pressure building

But the Australian Bankers Association has justified the Commonwealth Bank's decision to lift its rates by almost double the official move.

Association chief executive Stephen Munchenberg says pressures have been building for the banks to lift rates.

"What the Commonwealth Bank is saying is that that marginal effect has built up 2 basis points or 0.2 per cent each month, and that's now built up over nearly a year since the banks last moved interest rates, so there's a cumulative effect there," he said.

CBA head of retail banking Ross McEwan said the lender's practices have enabled it to stay strong during times of economic volatility.

"We were one of the major banks that continued to fund throughout the global financial crisis when others couldn't," he said.

"It was the strength of the Commonwealth Bank that actually gave us the ability to keep getting that funding off-shore and to make sure it was priced well.

"If we hadn't held onto that financial strength position, unfortunately customers would be paying even more than today."